October 25, 2010

“America needs to save more. America needs to produce more and we’re not going to do that with the current policies in place. We need to reverse course. We need to shrink the size of our government. We need higher interest rates in America, not low interest rates. People need to save their money, not go deeper into debt.”

in RT

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

“I don’t even know how they can take Geithner seriously anymore. The policies that we’re pursuing here in America are exasperating the very imbalances that the Treasury Secretary claims that he wants to reign in. The biggest offender is the United States.”

in RT

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

October 23, 2010

A U.S. proposal to restrict how much countries should be allowed to borrow or export has run into opposition at a G20 meeting in South Korea. Japan, Germany and Russia have criticised the so-called "planned economy" thinking. Investment strategist Peter Schiff told RT that Washington is the one to blame for creating the global imbalances that threaten the world's financial stability.

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

October 22, 2010

"But the world is learning what Peter Schiff has long predicted: that the US consumer is a drag on the world economy, not an engine for growth. As "decoupling" becomes more apparent, emerging economies are forming trade links among themselves, accelerating the process of decline for the United States."

October 20, 2010

As it is always typical in a bull market, you always have more violent moves down them up. The biggest moves, have always been on the downside over the last 10 years in this gold market rally, and this is no exception.

These violent moves, are designed to frighten people, to get them to think that the bull market is over, to shaken out the weak players. As they say, the bull market takes the stairs up and the elevator down. And that is what`s happening.

“The Fed is flooding the world with cheap money and the speculators who get the money are profiting, but the average American is going to have to suffer because he’s going to be spending a lot more for food and energy in the future.”

"I've been talking about the bond bubble for years. I've never been able to figure out when it would burst because markets can be irrational for quite some time. But I do know it is a bubble. I do know the 10-year note should not be yielding 2.5%."

in Yahoo Finance

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

October 15, 2010

And then I have a lot of agricultural stocks and energy stocks and I have a lot of Chinese stocks. I don’t want to give up China. I think China is going to outperform gold over the long term.

I think for most Americans, gold is going to do better than stocks, and it’s certainly going to do better than bonds. And right now the agricultural commodities are doing really well. I mean look what’s happening to corn in that last couple of days – soybeans, sugar, look what cotton’s been doing.

October 14, 2010

"Well I think you’d be out of your mind not to own gold. If someone told me the only thing they had was gold, I wouldn’t think they were crazy. I don’t only have gold. About 50 percent of my portfolio is in gold and silver mining stocks. That’s pretty aggressive. About 5 to 10 percent of my liquid net worth is in physical metals. So I’m a lot heavier in the actual mining companies than I am in gold because I think that they are very undervalued."

So my target is for a relationship that’s close to 1-to-1 between gold and the Dow. I’ve had that target since the Dow was worth more than 40 ounces of gold. Right now it’s worth 8 or 8-1/2 ounces, so I think it’ll get down to 1-to-1. But you don’t know where that’s going to be. It could be Dow 5,000-gold 5,000 USD, it could be Dow 10,000-gold 10,000 USD; it could be Dow 20,000-gold 20,000 USD; it could be Dow 2,000-gold 2,000 USD. I don’t know where it’s going to be, but I think it’s going to happen.

October 13, 2010

The market has certainly lost any hope of price stability in dollar terms. Since the Fed statement was released, gold prices have hit new all-time nominal highs, silver is the highest since the Hunt brothers tried to corner the market in 1980, and the Aussie dollar (a commodity currency) is nearing its own record highs. Even housing is headed back up. Meanwhile, the dollar index has hit a new 7-month low. In short, holders of US dollars are trading for any real assets they can acquire.

A confounding factor is the strong performance of US dollar-denominated bonds. When the Fed creates inflation, that erodes the value of fixed-asset investments like bonds, which can’t adjust their returns to the new price level. So many commentators are pointing to the record low bond yields as evidence that inflation is not a threat. But this is a misreading of the situation.

What is overlooked is that when the Fed prints more dollars, it typically uses them to buy bonds. Traders know this, so they are stocking up on bonds at ridiculous prices just to flip them to the Fed. They don’t care that, in the long run, the Fed’s policies will destroy the bonds’ value because in the short run, the weak dollar policy serves as a tremendous subsidy to bond sellers.

All the salient indicators tell me that the global dollar crisis has entered a new phase. The Fed is getting more aggressive about money printing because it really doesn’t have any other politically viable options. I’ve always said the Fed uses inflation to give appearance of prosperity, but I never expected them to come out and say it! You don’t give warning when you’re about to rob somebody, because then the victim might take precautions — in this case, buying gold and foreign equities.

We should be angry at what the Fed has pledged to do to us, and frankly I’m surprised there hasn’t been more of an uproar. But more important is to figure out how you are going to protect yourself.

"Many now claim that government deficits and Fed easing prevented a repeat of the Great Depression. From my perspective, calamity was not averted but merely delayed. The price for the reprieve will be a far more severe downturn, which I now think will surpass the Great Depression."

Much of the content of the latest Fed statement, released on September 21, echoes the central bank’s previous post-credit crunch pronouncements: there is still too much slack in the economy, interest rates are still going to be near-zero for an “extended period,” and the Fed will continue to use payments from its Treasury purchases to buy yet more Treasuries.

But this recent statement uses a new turn of phrase that should have Americans very upset. The Fed says that “measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate.” Though the wording treads lightly, it should not be taken lightly. It may signal the final push toward dollar collapse.

in DailyMarkets.com

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

October 11, 2010

Since the US economy has failed to recover as widely predicted, pressure on the Federal Reserve to conjure a solution has increased. In fact, the Fed now faces the hardest choices in its history.

It can either redouble its past efforts to re-inflate America’s bubble economy (risking the destruction of the US dollar) or it can stop pumping and let the economy deflate to a self-sustaining level. Unfortunately, both choices guarantee severe economic pain – but only one offers the possibility of ultimate success.

in europac.net

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

The gold stock index, was only up around 1% on the week despite the 2% move in gold and the 5 percent move in silver. And again, this underperformance of gold stocks, shows me that there continues to be more fear then greed on the gold market. Gold is not in a bubble, its simply climbing the wall of worry.

October 8, 2010

“This week, both the Fed and the Bank of Japan upped their respective antes in their battle of competitive currency devaluation. Although nearly all commodity categories have been rising rapidly as a result, the impact is most overt in the gold market.”

This is a friendly reminder to register for the New Orleans Investment Conference that will be held at the Hilton New Orleans Riverside on October 27-30, 2010.

I will be speaking at one of the world's most respected gold and natural resource conferences alongside Marc Faber, Dennis Gartman, the Aden sisters, Doug Casey, former Majority Leader Dick Armey, former Comptroller General David Walker, and many more. With gold rising past the $1,300 level and the Treasury market looking like a balloon about to pop, now is the time to hear expert opinions to help position yourself for the next phase of the dollar crisis.

I really enjoy this conference for its long history and cozy atmosphere - and especially the excitement of New Orleans. It's a chance to unwind, but also to roll up your sleeves and make decisions about your financial future.

NY Fed President William Dudley says it may take "several years" before inflation returns to levels consistent with the Fed's mandate. Exactly when did the Fed establish a floor for "acceptable inflation?" Where is that floor: 2%? (The core PCE index is currently up 1.4% for the year.) If we are below the floor, where's the ceiling: 3%? 4%? In 1971, President Nixon imposed price controls when inflation averaged 4%. That rate was considered so high that emergency measures were needed. Is that still the case? How much higher do costs have to go for cash-strapped Americans before the Fed can be expected to take its foot off the gas?

Without better understanding of where these parameters lie for the Fed, the markets will be flying blind through an impenetrable fog.

If the Fed were serious about maintaining long-term price stability, which is its actual mandate, it would need to allow prices to fall after the speculative booms that it helped create. As we saw in the 1980s, unemployment resolves itself when the monetary system is sound, but no one will hire under the uncertainty of a rogue, inflationary Federal Reserve. As people on fixed incomes, increasingly impoverished by low yields and rising prices, desperately re-enter the work force, look for unemployment to head higher.

in LewRockwell

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

Long ago, before economic models developed their current levels of sophistication, it used to be that the goal of a government's economic policy was to bring prosperity to its citizens; in other words, to raise the general level of material comfort, while at the same time reducing the amount of toil required to attain that end.

However, due to the blather spouted by modern economists, success is no longer measured in those terms. Instead, governments simply look to pump up nominal levels of gross domestic product (GDP), while simultaneously catering to the needs of entrenched political classes.

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

October 5, 2010

Given the U.S. dollar's status as the world's reserve currency, America's oversized status as the world's biggest consumer, and the influence of overseas export-oriented businesses on their home governments, the falling dollar is a difficult issue for many countries to ignore. And with the imminent arrival of a second round of quantitative easing from the Federal Reserve, the big guns of dollar destruction are being locked and loaded. The move looks poised to set off a frantic race to the bottom among global currencies, which will have important ramifications for every investor. Unfortunately, this is one race the United States is poised to win.

in Money Morning

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

October 1, 2010

Long ago, before economic models developed their current levels of sophistication, it used to be that the goal of a government's economic policy was to bring prosperity to its citizens; in other words, to raise the general level of material comfort, while at the same time reducing the amount of toil required to attain that end.

However, due to the blather spouted by modern economists, success is no longer measured in those terms. Instead, governments simply look to pump up nominal levels of gross domestic product (GDP), while simultaneously catering to the needs of entrenched political classes. As exports feed directly into GDP, currency devaluation has been widely used as a means to boost exports and therefore achieve 'prosperity.' In this model, selling is an end unto itself. There is no focus whatsoever paid to the obviously negative consequences of currency debasement: diminished purchasing power and lowered living standards.

Way back in the 20th century, a nation's currency was viewed much as a company's stock price. The reliability, competitiveness, and growth of a national economy usually translated into a strong currency. This system made sense.

Countries that offered the most fertile soil for investment capital or that made products other countries wanted would attract funds from abroad. Demand for the currency of these "blue chip" countries (which was needed to invest or buy locally) would inevitably push up the value of the currency. And so, much as shareholders of successful companies are rewarded by higher stock prices, citizens of successful countries were rewarded with stronger currencies - with which they could buy more goods and services both domestically and internationally, raising their living standards.

But all that has changed in recent years. With a strategy that seems to be taken from the playbook of Sam Walton, governments now look to take market share from competitors by lowering the cost of their exports. To do this, they have adopted a beggar-thyself policy of habitual currency debasement. Although such a move may benefit those who buy the products, it is a burden to the country's own workers who, like Wal-Mart employees, have to get by on subsistence wages. While the markets like a low-cost provider, this is not a niche that everyone can, or should, fill. While some will compete only on price, more successful ventures will compete on quality and innovation. For every Kia, there is a Mercedes Benz.

Given the US dollar's status as the world's reserve currency, America's oversized status as the world's biggest consumer, and the influence of overseas export-oriented businesses on their home governments, the falling dollar is a difficult issue for many countries to ignore. And with the imminent arrival of a second round of 'quantitative easing' from the Fed, the big guns of dollar destruction are being locked and loaded. The move looks poised to set off a frantic race to the bottom among global currencies, which will have important ramifications for every investor. Unfortunately, this is one race the United States is poised to win.

The goal of those trying to win the race to the bottom is to promote exports and create jobs. However, people don't work simply for their love of labor. They work so that they can earn enough to consume the things they need and want. Under normal conditions, a nation only exports its production, rather than consuming it domestically, to leverage its comparative advantages. If a country can produce one type of good especially efficiently, it can trade that good for other goods it doesn't make as efficiently at home. As a result of this process, its citizens will be able to consume more goods than if consumption had been limited to domestically produced goods.

However, when a government debases its currency in order to gain sales overseas, the nation earns less foreign exchange for the goods that it exports. As a result, its comparative advantage is blunted, and its citizens consume less as a result. In other words, as a nation's currency declines, its citizens are forced to work harder for less.

If a department store decided to have a sale in which all of its merchandise were marked down 50%, it will surely sell a lot more stuff. However, it would earn a lot less than if it had been able to sell its goods without marking them down. This is how currency debasement works. Similarly, one way for the unemployed to get work is to accept lower wages. Workers will sell a lot more of their labor if they accept 50% pay cuts. However, are they better off as a result? Relative to being unemployed, the answer is yes - but they would be much better off being employed at full pay.

Last week, Brazilian Finance Minister Guido Mantega made headlines when he mentioned that a worldwide currency war was brewing, with the winner being the nation with the weakest currency. Ignoring the irony of why countries would want to destroy their own currencies, Mantega reasonably warned that the conflict could get out of hand and destabilize the global economy. His comments came in the wake of overt efforts by both the Japanese and Swiss governments to intervene in the foreign exchange market to push down their respective currencies.

The politics of currency intervention are actually quite simple. Japan's economy is dominated by large manufacturers that export lots of goods to Americans. The problem is that Americans can't really afford to buy in the quantities that they did just a few years ago. So, instead of looking for new customers with more money to spend, Japanese manufacturers use their political clout to force a bailout of their traditional US customers.

Essentially, in order to protect the status quo of their elite, governments are surreptitiously forcing workers to take pay cuts through inflation. Everyone works harder, but the extra effort does not raise living standards. In fact, despite the added jobs, overall consumption will fall.

The irony for the United States is that its currency debasement plan has little to do with saving export jobs. We don't have many of those left to save. The government is debasing our currency merely to 'pay' its own bills, preserve bank profits and Wall Street bonuses, allow us to continue buying homes we can't afford, and prevent many service-sector workers from having to find more productive jobs. In return, they will perpetuate an unworkable economic model. So while the US will probably 'win' the currency war, we will definitely lose the far more important battle to improve our quality of life.

in Europac

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

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BIO

Peter David Schiff (born March 23, 1963) is an American economist, author, commentator and popular video blogger. Schiff, a licensed stock broker, is the president of Euro Pacific Capital, headquartered in Westport, Connecticut